FCC Open Internet Proposal Could End Net Neutrality by
George H. Pike
Posted On May 13, 2014

In what is being described as the end of Net Neutrality, the Federal Communications Commission (FCC) expects to publicly propose new rules to allow ISPs to create different rate scales and transmission speeds for different types of content. Under the proposal, which is currently being circulated among the FCC commissioners, content providers such as Google or Netflix could pay extra for expedited, internet “fast lanes” to speed their content to their customers. Reaction to the proposal was swift, with many user groups arguing that content providers unable to access or pay for fast lanes would suffer because their content would be more difficult to obtain and that overall internet innovation would suffer.

The proposal is the latest salvo in a decade-long debate over Net Neutrality or, as it’s described by the FCC, an “Open Internet.” Net Neutrality is described as an environment where all content flowing through the internet is treated the same and provided through the various components of the internet equally. From the consumer standpoint, it means that the consumer should be able to obtain any and all legal internet content without discrimination based on the type or size of the particular file.

However, with the growth of the internet and its increasing use to download and stream large files such as Netflix movies, Skype videoconferences, or YouTube videos, strains on the internet infrastructure started to emerge, particularly at the broadband provider level. Broadband providers such as Comcast, Verizon, and AT&T provide what has been described as the “last mile” access to the internet, connecting individual consumers to the internet’s telecommunications backbone through cable, digital subscriber lines (DSL), and fiber optic lines. As traffic on these lines increases, their ability to provide highest-speed content suffers. At the core of the Net Neutrality debate has been the desire of these broadband providers to have the ability to offer different transmission speeds through their last-mile lines and to offer content providers the option to pay higher costs to access these higher-speed lines.

The telecommunications and last-mile infrastructure of the internet is regulated by the FCC under the authority of the Telecommunications Act of 1996. This act distinguishes between common carriers (the internet backbone that primarily just transmits information from Point A to Point B) and “enhanced service providers” (which either required or utilized “computer processing applications” to share information). Under the act, the FCC can regulate common carriers, but its ability to regulate enhanced service providers is restricted.

The FCC’s legal challenge has been that many broadband providers are both common carriers and enhanced service providers. From 2000 through 2010, the FCC twice attempted to craft basic rules for internet operations. Those rules required ISPs to disclose network management practices and characteristics, restricted their ability to block lawful content, and forbade them to ban discrimination in transmitting lawful network content. Those efforts were challenged by the broadband providers and blocked by the courts. Most recently, in January 2014, a federal court held that the FCC did not have the legal authority under the Telecommunications Act to impose these rules on broadband providers.

The current proposal is the FCC’s attempt to respond to the pressure to allow broadband providers to establish different tiers for last-mile transmission of internet content, while keeping to the spirit of their Open Internet rules. The proposals are being internally circulated among the FCC commissioners and have not yet been released to the public, although aspects of the proposal have been reported in major media outlets including The Wall Street Journal and The New York Times. Based on those published reports, the FCC would continue to restrict broadband providers from blocking lawful content and would require full disclosure of network management practices and characteristics.

The major change is that the proposal would allow broadband providers to prioritize traffic through paid agreements with content providers, so long as the agreements are not “commercially unreasonable.” For example, Comcast could enter into an agreement with Netflix to permit Netflix to have priority over other traffic passing through Comcast’s last mile of internet access in return for higher transmission fees paid by Netflix. Comcast would not be able to ban or block any competing content from access, the terms of the agreement would have to be “commercially reasonable,” and all such agreements would have to be fully disclosed. The FCC would investigate any agreements alleged to harm either competition or consumers.

Consumer groups and others responded to the reports with concern. Michael Weinberg, VP of the consumer advocacy group Public Knowledge, issued a statement in which he said that the FCC is “inviting ISPs to pick winners and losers online. … This is not net neutrality.” Writing for The Guardian, commentator Dan Gillmor described the proposal as “a potentially tragic turning point in American politics and policy. We are on the age of turning over the internet … to telecoms …” The New York Timespointed out that broadband providers are also content providers, noting Comcast’s ownership of NBCUniversal and Comcast’s plan to take over Time Warner Cable. TIME pointed out that FCC chairman Tom Wheeler was a “former cable and wireless industry lobbyist.”

Congressional leaders on both sides of the aisle also raised concerns. House Minority Leader Nancy Pelosi (D-Calif.) issued a statement indicating that the FCC proposal raised “serious concerns that the Internet might soon lose the core of what it is—an open space for innovation, entrepreneurship, connection and communication.” Congressmen Fred Upton (R-Mich.) and Greg Waldon (R-Ore.), both members of the House Energy & Commerce Committee, said in a joint statement, “The marketplace has thrived and will continue to serve customers and invest billions annually to meet Americans’ broadband needs without these rules.” The subcommittee also announced hearings on the proposal, to be held on May 20.

In response, Wheeler defended the proposal—even before it has been fully released to the public. In a blog post, Wheeler argued that there was a “great deal of misinformation” about the proposal. He stated that under the proposal, “behavior harmful to consumers or competition by limiting the openness of the Internet will not be permitted” and that earlier policies of the FCC to project against unjust and unreasonable discrimination have not been abandoned.

The proposal has not yet been made public. It is currently being circulated among the five commissioners of the FCC and will be made public at or immediately after the FCC’s next scheduled open meeting on May 15 in Washington, D.C. The FCC will consider the proposal, and if approved, it will be published in the Federal Register and on the FCC’s website. An opportunity for public comment would follow, with a stated goal of having enforceable rules in effect by the end of 2014.

George H. Pike is the director of the Pritzker Legal Research Center at Northwestern University School of Law. He writes the Legal Issues column and feature articles for Information Today.